Property liability in a limited liability company (Pol. spółka z o.o.)
People planning to set up their own business have several options to choose from. Among them, the most popular options are sole proprietorship and limited liability companies. Civil, limited partnership and partner companies are in the background. Why? There are several reasons for this!
Organization of the Company
The limited liability company seems to be a lucrative form of running a business because it has a separate legal personality. Despite the fact that the management of the company acts on its behalf and represents it, it is an entity legally responsible for itself. What is important, a limited liability company can be run independently, without partners, and of the business requires a minimum of just PLN 5,000 for “spin off”. The health contribution is not obligatory, and cash rewards can be paid in various ways (dividend, contract for specific work, remuneration for the board). The issue of ZUS contributions is also important – the partners do not have to pay them. This form of economic activity can be quickly registered via the Internet.
Limited property liability?
Let’s take a closer look at the property issue, because it is often taken up in industry magazines or online thematic forums. Who is responsible for the company’s finances, or more strictly for debts and financial damages incurred by the company? Generally, in the light of the law, the thing is as follows – the company is responsible for its failure, and the partners are obliged to liability, in proportion to the amount of their cash contributions to joint operations. However, it may happen that for various reasons the creditors may make monetary claims to the company’s shareholders. When does this happen?
Better to be safe than sorry
The assets of the company’s board members may be at risk in several situations:
When establishing a company, false data may be provided in documents that provide for payment or increase of share capital. When considering the situation in such a situation, the joint and several liability of the shareholders towards the company’s creditors will continue for three years after the registration of the activity or the increase in capital. What is the conclusion? All documents should be read accurately, even several times before signing the statement on the payment of capital to the company. Failure to pay in on the date of actual signature, even if the difference is just one day, already forms a just cause for the creditor to claim compensation from the shareholder.
The second risk is related to the situation of not reporting the company’s bankruptcy on time. Here, however, it needs to be clarified that only the shareholders, who are also members of the company’s management board at the same time, bear this financial liability. When it so happens that the obligations of the company exceed the value of its assets or the entity fails to fulfil its due obligations, then it is not difficult to find a problem. Creditors in such a situation can turn to one of the board members if they fail to enforce the due amount from the company. The Management Board is required to submit a bankruptcy petition not later than two weeks after such a situation arises.
Another problem concerns the contribution in kind (a non-monetary contribution) of a shareholder with an actual value that is lower than the stated one. In such a case the shareholder is obliged to cover the difference in value.
The next case involves the transfer of the share (e.g. sale, donation) by the partner. Then, together with the buyer, he bears joint and several liability for non-performance of the benefits due to the company from the share sold.
The information in this article is just a reconnaissance. In order to broaden the issues, one should look at the source – trade magazines and normative regulations. If someone is going to set up a limited liability company, such knowledge is essential, because it can protect against making unwise decisions.